By Victoria Galeano*
In boardrooms from New York to São Paulo, a new conversation is unfolding—a dialogue that bridges the gap between corporate profits and the planet’s most precious resources. Biodiversity credits, once a niche concept reserved for environmentalists, are now at the forefront of corporate strategy, driving a renaissance in how businesses engage with the natural world.
Gone are the days when biodiversity was merely a checkbox in a company’s Corporate Social
Responsibility (CSR) report. Today, it’s a cornerstone of sustainability strategies, with biodiversity credits emerging as a powerful tool to offset environmental impacts, support local communities, and enhance corporate reputations.
Tackling the Tangibles: The Challenges of Biodiversity Credits
The road to widespread adoption of biodiversity credits isn’t without its bumps. Like any transformative idea, it faces hurdles—particularly when it comes to measurement, market demand, and regulation. But for those willing to lead the charge, the rewards are substantial.
• Complexity in Measurement and Verification: Measuring biodiversity isn’t as straightforward as tracking carbon emissions. It’s a mosaic of species richness, ecosystem health, and countless other variables. The International Advisory Panel on Biodiversity Credits is tackling these complexities head-on, crafting rigorous frameworks that ensure every credit purchased reflects genuine environmental gains. The Taskforce on Nature Markets is also in the mix, pushing for standardized metrics that can be applied across the globe.
Consider the Willamette Partnership in the U.S., which has pioneered standardized tools for measuring water quality and habitat restoration. Or look at British Petroleum (BP), which has taken the plunge into biodiversity credits by investing in seagrass restoration off Florida’s coast. These initiatives aren’t just about meeting metrics; they’re about making tangible environmental impacts that resonate with consumers and stakeholders alike.
• Market Demand and Pricing: Creating a robust market for biodiversity credits requires more than good intentions—it demands real, sustained demand. Organizations like NatureFinance are working to create transparent, accessible markets that incentivize companies to get involved. The Nature Conservancy, meanwhile, is forging partnerships with corporations, integrating biodiversity credits into broader sustainability strategies.
BBVA is a prime example of how financial giants are getting in on the action. The bank’s investment in projects that protect tropical rainforests and mangroves isn’t just about ticking a box; it’s about aligning their portfolio with the growing demand for green investments. Similarly, Volkswagen is investing in biodiversity credits to offset the environmental impact of it operations in Latin America, particularly in the Brazilian Cerrado—a move that’s as strategic as it is environmentally conscious.
• Regulatory and Legal Frameworks: Without clear, harmonized regulations, biodiversity credits can’t reach their full potential. That’s where the Global Environment Facility (GEF) and UNEP FI come in, advocating for the development of international standards that ensure biodiversity credits are recognized and valued globally.
Companies like Glencore are navigating these regulatory waters with finesse. Facing stringent biodiversity offset requirements in countries like Australia and Canada, Glencore has turned to biodiversity credits to comply with regulations and safeguard endangered species. It’s a strategy that highlights the importance of robust legal frameworks in driving corporate investment in biodiversity.
• Standardized Metrics and Reporting: The need for globally accepted standards is critical. It’s not just about what you do—it’s about how you report it. The Science Based Targets Network (SBTN) is guiding companies like HSBC to adopt standardized reporting practices, ensuring that biodiversity projects are transparent, credible, and aligned with global goals.
Nestlé, for instance, has taken this to heart in its Alto Mayo Forest project in Peru. By adhering to international benchmarks, Nestlé not only enhances its sustainability profile but also builds trust among consumers and stakeholders who demand more than just lip service when it comes to environmental commitments.
• Digital Platforms and Multi-Stakeholder Governance: In the age of digital transparency, blockchain technology is proving to be a game-changer. Microsoft is leading the charge, using blockchain to ensure every biodiversity credit transaction is traceable and trustworthy. This isn’t just about tech for tech’s sake; it’s about building the trust that’s essential for these markets to thrive.
Meanwhile, TotalEnergies is taking a different approach, emphasizing the importance of multistakeholder governance in its projects. By involving local communities and NGOs in its forest conservation efforts in Africa, TotalEnergies ensures that the benefits of biodiversity credits are shared equitably—a model that others would do well to follow.
Government as a Catalyst: Incentivizing Biodiversity Credits
Governments are the linchpin in creating environments where biodiversity credits can thrive. Through tax incentives, regulatory mandates, and public-private partnerships, they have the power to accelerate the adoption of these vital tools.
• Tax Incentives and Subsidies: Financial incentives are a powerful motivator, and governments
are using them to encourage corporate investment in biodiversity credits.
o Brazilian Government: By offering tax incentives for investments in the Amazon’s biodiversity credits, Brazil is promoting reforestation and the protection of endangered species, turning conservation into a lucrative venture.
o European Union: Through subsidies tied to the EU Green Deal, the European Union is encouraging companies to purchase biodiversity credits as part of its broader goal to restore degraded ecosystems across member states.
• Regulatory Mandates: Mandates are an effective way to ensure companies take responsibility for their environmental impacts, particularly in sectors like mining and agriculture.
o Australia: Australia’s biodiversity credit mandates for the mining sector are a model for how regulations can drive corporate responsibility, ensuring that companies offset their environmental impacts by investing in the protection of native species and habitats.
o South Africa: In South Africa, biodiversity credit mandates for agricultural companies are helping to preserve the country’s rich biodiversity, setting a precedent for how regulatory frameworks can support sustainable land use.
• Public-Private Partnerships: Collaboration between the public and private sectors is essential for scaling the impact of biodiversity credits. These partnerships are the backbone of successful conservation efforts.
o United States: The USDA’s partnerships with private companies to fund biodiversity credits for wetland restoration and wildlife conservation are a testament to the power of public-private collaboration.
o China: China’s government is working with international corporations to fund biodiversity credits aimed at restoring wetlands and forests—ecosystems critical to global biodiversity.
Biodiversity Credits: A New Chapter in Sustainable Development
Biodiversity credits are not just a financial instrument—they’re a lifeline for ecosystems that provide essential services and a catalyst for inclusive growth.
• Support for Ecosystem Services: Biodiversity credits are funding the restoration of ecosystems that deliver vital services like clean water and climate regulation, linking conservation directly to sustainable development goals.
o World Bank: The World Bank’s financing of biodiversity credits in developing countries is a strategic move that ties ecosystem restoration to broader sustainable development initiatives, ensuring that the benefits of conservation are felt across the globe.
o UNDP: Through its Global Environment Facility (GEF), the UNDP is integrating
biodiversity credits into projects that enhance ecosystem services in vulnerable regions, making conservation a cornerstone of development.
• Promotion of Inclusive Growth: By ensuring that local communities benefit from biodiversity credits, these markets contribute to social equity and poverty reduction, key components of sustainable development.
o The World Bank: In its poverty reduction programs, the World Bank is using
biodiversity credits to ensure that communities dependent on natural resources are the primary beneficiaries of conservation efforts.
o UNESCO: By promoting biodiversity credits in World Heritage Sites, UNESCO is
ensuring that local communities receive economic benefits from the preservation of their cultural and natural heritage.
Navigating the Risks: Ensuring the Integrity of Biodiversity Credits
Biodiversity credits are not without risks—greenwashing, market volatility, and equity concerns are all challenges that must be managed to maintain market integrity.
• Greenwashing: The threat of companies using biodiversity credits to appear more sustainable than they are is real, but organizations like the ISO are setting standards to prevent it.
o ISO: The ISO’s development of standards for biodiversity credits ensures that these instruments meet strict environmental and social criteria, safeguarding against greenwashing.
o Taskforce on Nature Markets: By establishing robust governance frameworks, the Taskforce on Nature Markets is working to ensure that biodiversity credits represent real, additional conservation efforts.
• Market Volatility: Biodiversity credit markets are still evolving, and their growth is
accompanied by fluctuations that could deter investors. Financial instruments from organizations like the IFC are key to stabilizing these markets.
o IFC: Through the creation of financial products designed to mitigate the risks associated with biodiversity credits, the IFC is encouraging investment and ensuring that these markets can mature.
o NatureFinance: Advocating for a stronger market infrastructure, NatureFinance is working to reduce volatility in biodiversity credit markets, providing a stable foundation for long-term investment.
• Equity Concerns: Ensuring that the benefits of biodiversity credits are equitably distributed is essential. Organizations like the International Advisory Panel on Biodiversity Credits and the Rights and Resources Initiative (RRI) are leading the way in promoting fair benefit-sharing.
o RRI: The Rights and Resources Initiative is ensuring that Indigenous Peoples are
included in the governance of biodiversity credits, integrating their knowledge into conservation strategies and safeguarding their rights.
o IUCN: The IUCN’s advocacy for equitable benefit-sharing ensures that local
communities are fairly compensated for their conservation efforts, making biodiversity credits a tool for both environmental and social justice.
Corporate Trailblazers: The Role of Companies in Biodiversity Credits
In today’s business environment, the companies that lead are those that understand the value of biodiversity—not just as a moral imperative, but as a strategic asset. The integration of biodiversity credits into Corporate Social Responsibility (CSR) and sustainability strategies is no longer optional; it’s essential.
• Corporate Social Responsibility (CSR): Forward-thinking companies like Nestlé, Chevron, Unilever, IKEA, Apple, and Volkswagen have already integrated biodiversity credits into their sustainability playbooks. These credits aren’t just about doing good—they’re about doing well by doing good.
o Nestlé: In Peru’s Alto Mayo Forest, Nestlé isn’t just restoring degraded lands; it’s investing in the future of sustainable sourcing. By purchasing biodiversity credits, Nestlé supports local communities, ensuring that conservation and commerce go hand in hand.
o Chevron: In Zambia’s Tondwa Game Management Area, Chevron is funding habitat restoration and anti-poaching initiatives. This isn’t just charity—it’s a calculated investment in the ecological health of a region that’s crucial to Chevron’s long-term success.
o Unilever: In the world of palm oil production, Unilever is setting a new standard by integrating biodiversity credits into its sourcing strategies. The result? Sustainable agricultural practices that protect biodiversity-rich areas and secure the future of Unilever’s supply chains.
o IKEA: By 2030, IKEA aims to be climate-positive, and biodiversity credits are a big part of that equation. The company’s investment in large-scale reforestation and ecosystem restoration projects doesn’t just enhance its sustainability credentials—it ensures that IKEA remains a leader in the global push for environmental stewardship.
o Apple: In Colombia, Apple is investing in mangrove restoration projects that use biodiversity credits to support climate resilience. It’s a strategy that not only protects coastal communities but also aligns with Apple’s broader environmental goals.
o Volkswagen: Volkswagen’s purchase of biodiversity credits in Latin America,
particularly in the Brazilian Cerrado, is more than just a nod to sustainability. It’s a strategic move that mitigates the environmental impact of its automotive production while supporting the preservation of critical ecosystems.
• Innovation in Products and Services: Companies are innovating by integrating biodiversity credits into their products and services, turning sustainability into a competitive advantage.
o L’Oréal: With a commitment to sustainable beauty, L’Oréal is sourcing ingredients from biodiversity-friendly farms, backed by biodiversity credits that ensure the preservation of natural habitats. It’s a move that resonates with consumers and sets L’Oréal apart in a crowded market.
o Nike: In its quest for sustainable materials, Nike has incorporated biodiversity credits into its supply chain, particularly in leather sourcing. These credits support sustainable grazing practices that protect biodiversity, giving Nike a green edge in the competitive world of athletic wear.
o Apple: Beyond CSR, Apple’s use of biodiversity credits in its product lines—such as sustainably sourced materials—demonstrates how innovation and environmental stewardship can go hand in hand, appealing to a customer base that demands more from the brands they support.
• Leadership and Advocacy: Companies are not just participants—they’re leaders and advocates, setting industry standards and driving the adoption of biodiversity credits across sectors.
o Business for Nature Coalition: This coalition, which includes Unilever and IKEA, is at the forefront of advocating for nature-positive practices, pushing for the mainstream adoption of biodiversity credits across industries.
o HSBC: As a leader in the financial sector, HSBC is driving the conversation on
biodiversity credits, advocating for the integration of biodiversity metrics into ESG reporting standards. It’s a move that’s shaping the future of sustainable finance.
o TotalEnergies: By participating in global conservation initiatives, TotalEnergies is not just following trends—it’s setting them. The company’s advocacy for stronger regulatory frameworks and partnerships is helping to build the foundations of a global biodiversity credit market.
Biodiversity credits are more than just a trend—they’re a transformative tool that can align corporate strategy with the urgent need to protect our planet’s natural heritage. For companies, the integration of biodiversity credits into their sustainability strategies offers a unique opportunity to lead in the new economy, where profitability and purpose are inextricably linked. Governments and financial institutions have a critical role to play in creating the frameworks and incentives that will allow these markets to thrive.
As we move forward, the collaboration between the private sector, governments, and NGOs will be essential. By embracing biodiversity credits, businesses can do more than just mitigate their environmental impacts—they can drive innovation, support local communities, and secure their place in a world where sustainability is not just an option, but a necessity.
* Victoria Galeano is founder and CEO of consultancy Prissma. It supports clients with strategy consulting, capital raising, investment opportunities, and origination services for projects that contribute to sustainable development.